The expert called the situation with the ruble “fragile”: the Central Bank specifically limits the strengthening

Mark Goykhman: “The Bank of Russia has no goal to strengthen the national currency as much as possible”

The Central Bank has sharply raised the key rate – immediately to 12% in order to stop the fall of the ruble. But why didn’t the Bank of Russia take more radical measures? So, in February 2022, the rate more than doubled to 20%, which became a historical record. After that, against the background of the active actions of the Bank of Russia, the Ministry of Finance and the general adaptation of the Russian economy, the ruble exchange rate began to decline rapidly. According to financial analyst Mark Goykhman, now the Central Bank is not trying to help the ruble as much as possible. The expert told MK what the future holds for the ruble, and what steps the Bank of Russia can take to curb inflation.

– Why didn’t the Central Bank raise the rate to the same 20%? Are you going to take it step by step?

– The situation now is radically different from the spring of last year. Then there was a sharp demolition of the geopolitical paradigm, unprecedented sanctions were introduced with unknown consequences, the jump in the exchange rate was much stronger, there was general panic. Extraordinary measures were needed, which the Central Bank took. Now the situation is different. The course dynamics, although negative, is much smoother. Not so great is the surge in inflation, against which the measure of the Central Bank is largely directed. In addition, it is necessary to take into account not only the positive, but also the negative consequences of the rate increase. This is, first of all, the rise in the cost of lending for business and the population, the discouragement of production and investment, and the restriction of economic growth. The economy cannot afford such a prohibitive rate.

– In 2022, to help the ruble strengthen, the Bank of Russia took several measures at once. On March 9, 2022, the Central Bank temporarily banned banks from selling cash to citizens. Until September 9, Russia has a temporary procedure for issuing funds from foreign currency deposits or accounts of citizens. Since March 2, 2022, President Putin’s decree has been in force prohibiting the export of cash foreign currency in excess of $10,000 per person. In April 2022, the Central Bank limited the transfer of funds abroad. Why are similar measures not being introduced now?

– The acute situation described last year required a set of emergency measures, not limited to an increase in the key rate. But now the main of those decisions that limit the demand for currency continue to operate, there is no need to introduce them again. In addition, now there are no goals to sharply strengthen the national currency, for example, to 50-60 rubles. After all, the situation in the economy is now different. Lasting and understandable sanctions. Export restrictions that did not exist until almost the end of 2022. The deficit of the state budget that appeared in the current year. This and many other things make it necessary to limit the strengthening of the ruble. A relatively high exchange rate to it should be maintained; this helps to overcome these negative consequences largely by increasing the ruble income of exporters and the budget from sales of goods abroad. The goal is not to strengthen the ruble as much as possible, but to prevent its unnecessarily sharp depreciation. There is a certain optimum, the “golden mean” of the exchange rate, which is what the Central Bank and the government are striving to achieve. A very weak ruble is bad, leading to uncontrolled inflation, disorientation of production, a sharp rise in the cost of imports, and a drop in household and business incomes. But an excessively strong currency is not at all a matter of pride. And not only in Russia, but also in almost all export-oriented countries, be it the eurozone, Great Britain, Japan, Canada. In the conditions of global competition, in many ways, the relatively low exchange rate resembles a game of “giveaway”. Not the one who has a strong currency wins, but the one who has moderately weakened it in relation to others. It is to solve domestic economic problems by increasing income in the national currency from saving exports.

– According to what scenario will the Central Bank act in the current situation?

– The Central Bank will begin to observe, sensitively “keeping a finger on the pulse.” It’s a very fragile, uncertain situation. And as we see, it is impossible to either “overpress” or “underpressure”. It is possible that if inflation continues and the ruble weakens excessively, the rate will be raised further. The Central Bank announced such a possibility in principle. Perhaps, the practice of last year, which was canceled earlier, with the obligatory sale of foreign exchange earnings by exporters, will also be needed. To combat inflation, the Central Bank, if necessary, can tighten the conditions for granting loans by banks to limit the money supply, increase reserve requirements.

Read also: “I bought a dollar at 100, I sell at 90”: what is happening in the capital’s exchange offices